Future Group to enter mortgage lending

The financial services arm of Kishore Biyani’s Future Group plans to enter the mortgage lending business, seeking to tap burgeoning demand for home loans in a country where up to 800,000 apartments and houses are expected to be ready for possession in the next three years.

Future Capital Holdings Ltd, as the financial services firm is known, has already registered a home finance company named Future Capital Home Finance Pvt. Ltd with the Registrar of Companies (RoC), according to the RoC’s website.

Now, Future Capital is in the process of registering the business with the housing finance regulator, the National Housing Bank, according to a person with direct knowledge of the matter who asked not to be named. A spokesperson for Future Capital declined to respond to an emailed questionnaire sent by Mint on Tuesday.

The Bombay Stock Exchange-listed Future Capital, with a net worth of Rs 750 crore and a loan book of Rs 2,000 crore as of September, provides consumer loans and has a 30,000-strong customer base.

Home loans are the fastest growing segment for commercial banks, which have a 60% share of the market, with mortgage lenders such as Housing Development Finance Corp. Ltd accounting for the rest.

Outstanding home loans are estimated at Rs 5 trillion in a country where between 750,000 and 800,000 new dwelling units will be ready for delivery in three years, according to real estate consultancy Jones Lang LaSalle.

Analysts expect housing loans to grow at an annual pace in excess of 20% in the coming year and expect competition in the mortgage lending space to increase.

“It’s a very competitive area as yields are pretty low compared to any other financing,” says Hatim Broachwala, banking analyst for Mumbai-based Khandwala Securities Ltd.

Biyani has built Future Group into a retail business with around Rs 10,000 crore of annual revenue.

In August, Future Group appointed V. Vaidyanathan, former head of ICICI Prudential Life Insurance Co. Ltd, as the managing director of Future Capital with the aim of turning the unit into a full-fledged financial services company.